Without knowing much about the litigation finance sector or the particular company, the payoff seems to be cyclical to me. The probability of the outcome might be independent of economic cycles (although it would be good to see some data), the payoff is very much cyclical. A yacht was worth much much less in 2009 than in 2007 and the value of most private or corporate assets is cyclical.
Is this an “introduction to litigation finance” or a short position paper? Does Bruce have a position (...and why not disclose that, whether yea or nay)? The “doubts” raised here are two years old. Anyone looking to balance the scales with a detailed rebuttal can read through Caro-Kann’s report via this FT link: https://www.ft.com/content/c370d8f7-4e5c-34e0-9ed7-b7503794cd66
Lukas, please note that Bruce selected a very atypical case. The vast majority of Burford’s cases are strictly commercial— Contract disputes, I/P disputes, M&A transactions, etc.... therefore the need to expose a spouse or grind a personal axe rarely comes into play.
Fantastic article, Bruce. I am curious about Burford's business model as there are numerous conflict of interests. It probably makes the most sense for Burford to have their clients settle to maximize shareholder returns. As you mentioned, however, they do not own the case. Their clients may be motivated to expose their spouses, etc. instead of a sole focus of monetary compensation. This may factor into which cases they fund...?
Beyond the lack of alignment, what role does representation play? The article says the representation operates on referrals from law firms, but can those wronged approach Burford directly and inquire on which representation they would fund?
Nice article Mark - BTW I'm pretty sure you did disclose your Revolut holdings in a previous letter. I was aware of it at least.
Litigation Capital Management utilises the cash based accounting method.
https://www.lcmfinance.com/shareholders/accounting-model/
Without knowing much about the litigation finance sector or the particular company, the payoff seems to be cyclical to me. The probability of the outcome might be independent of economic cycles (although it would be good to see some data), the payoff is very much cyclical. A yacht was worth much much less in 2009 than in 2007 and the value of most private or corporate assets is cyclical.
Is this an “introduction to litigation finance” or a short position paper? Does Bruce have a position (...and why not disclose that, whether yea or nay)? The “doubts” raised here are two years old. Anyone looking to balance the scales with a detailed rebuttal can read through Caro-Kann’s report via this FT link: https://www.ft.com/content/c370d8f7-4e5c-34e0-9ed7-b7503794cd66
Lukas, please note that Bruce selected a very atypical case. The vast majority of Burford’s cases are strictly commercial— Contract disputes, I/P disputes, M&A transactions, etc.... therefore the need to expose a spouse or grind a personal axe rarely comes into play.
(disclosure: long BUR)
Fantastic article, Bruce. I am curious about Burford's business model as there are numerous conflict of interests. It probably makes the most sense for Burford to have their clients settle to maximize shareholder returns. As you mentioned, however, they do not own the case. Their clients may be motivated to expose their spouses, etc. instead of a sole focus of monetary compensation. This may factor into which cases they fund...?
Beyond the lack of alignment, what role does representation play? The article says the representation operates on referrals from law firms, but can those wronged approach Burford directly and inquire on which representation they would fund?